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Tests, tax and targets

25 November, 2004

New rules on planning gain fail to deliver, the appeals system self-destructs and nobody can define live/work

Planning minister Keith Hill has announced a long-awaited draft circular on the notorious 'Section 106 agreements', properly known as planning obligations. Though falling short of total reform, the guidance will provide a stopgap pending decisions on Kate Barker's 'planning gain supplement' proposal, due at the end of the year, and maybe a clearer regime of planning tariffs. Both are likely to be as much in the gift of the chancellor of the exchequer as of the ODPM. Hill has said: 'We recognise how important it is to improve the current system of planning obligations? our aim is to issue the final version next spring.' The draft circular sets out possible changes to the current negotiated system of planning obligations that are to be made in advance of potentially more-major reforms to the system that may come forward in the next two to three years. It summarises current policy and practice thus: 'Current policy on planning obligations, as set out in Circular 1/97, requires fair, open and reasonable negotiation of planning obligations, so that the obligations allow development to go ahead which might otherwise have been refused.

The circular advises local authorities of the 'tests' that they should apply in seeking planning obligations in order to ensure they are in line with the secretary of state's policy.

'These policy tests are set out in paragraph 7 of Circular 1/97. However, case law (has) confirmed a broader interpretation of the type of developer contribution that can be agreed under Section 106. It has required only a connection between an obligation and development which is 'greater than de minimis'. So, in practice, local authorities are accepting contributions from developers that go beyond the definition in Circular 1/97 - contributions that are related to the development but that do not meet the 'necessary' requirement of the secretary of state's policy tests.' In putting forward proposals for reform of the current system of planning obligations, the government is seeking to address a number of the criticisms raised by those who responded to the consultation in 2003 and in subsequent discussions.

'The government's main aim is to make changes to the current system in order to promote speed, certainty, transparency and accountability.' Kelvin MacDonald, director of policy at the Royal Town Planning Institute (RTPI), said: 'The RTPI has long argued that it is not the role of planning to act as some sort of tax collector - and these proposals support that position.' He goes on to raise concerns that this draft is not the end of the story and that the Treasury and ODPM are working on proposals to introduce land or development taxation. Under the previous circular, there was some doubt about the validity of including affordable housing within the scope of planning obligations. The new draft provides for that provision while proposed updates to PPG 3 (Housing) are being debated.

These will emerge around the end of the year and will update guidance on specific size, type and affordability of new stock.

In summary, the draft circular brings guidance into line with the new planning act, simplifies some of the policy tests, clarifies advice on payments and gives more emphasis to national, regional and local plan policies. It also encourages the use of formulae and standard charges (such as tariffs to be set out in policies to aid predictability and process) and also encourages the offer of unilateral undertakings. Anticipate consultees (deadline 25 January 2005) backing the RTPI's support for the original intention that planning obligations should focus on the direct impact of a development, rather than seeking a range of benefits that should be funded in other ways. Those other ways are, in any case, on the horizon.

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